The real reason McCain and Lindsey Graham embarrassed themselves on the floor of Senate had nothing to do with what Rand Paul said. Rand Paul’s ideas terrify McCain, Graham, and most of the Republican establishment.

Those Troublesome Libertarian Kids

Senator John McCain mocks Senator Rand Paul, saying the Kentucky Republican won’t be taken seriously by appealing to “libertarian kids in their college dorm rooms.” Senator McCain is wrong.

Young libertarians are the closest thing to conservatives coming out of the Millennial generation. If the GOP is to play a role in the 2016 election, it must attract every possible Millennial libertarian.

That puts establishment politicians like McCain and Graham in a precarious position between two competing interests: small government libertarians and big money crony capitalists.

The Conflict That Divides The GOP

These crony capitalists aren’t evil. Neither are the Republicans who enable them. They all believe in American exceptionalism. They invest money and time and energy to keep America great. They honestly believe that America’s strength depends on companies producing wealth. On that point, they’re right. Where they go wrong is cause and effect.

Republican crony capitalists believe that corporate profits are the source of American greatness. Libertarians and tea party conservatives believe that corporate profits are the rewards of American greatness.

(Democrats, by the way, believe that government is the source of American greatness . . . if they believe in American greatness at all.)

Republican Crony Capitalism Can’t Survive On Its Own

Crony capitalists feel they must invest in politicians who will protect and promote their business interests. Those business interests, in turn, create jobs for people, donate funds to improve their communities, fund non-profit charities and schools, and guide politicians on good policy. These are noble activities that benefit all of society.

Over the years, though, these civic investments – increasingly through donations to candidates — have become less noble and more self-serving. With the rise of profit maximization and shareholder value thinking, corporations treat government and politicians like vendors.

Investing in good government should improve business conditions by promoting a stable economy in which free market capitalism flourishes. Crony companies, however, expect a measurable and direct return on investments for their companies and shareholders alone. The rest of the country be damned.

Crony capitalists accept more regulation and taxes because they think it will give them an advantage over their competition. They trade their independence (and risk) for targeted tax breaks and protected markets. This cycle repeats itself election after election, and each time the government comes out more powerful and corporations more dependent.

This cycle has repeated so many times that corporate dependency on government now threatens the balance of power between people and state. The financial collapse of 2008 demonstrated that big government and big business have grown too large to stand on their own. They lean on each other like weary heavyweight boxers in the 15th round of a brutal championship fight. If one falls, they all fall. And we get crushed.

What Libertarian Kids Want Threatens the Establishment

Libertarians realize that it was never supposed to be this way. More importantly, we’re pretty sure that America would never have become great had he started out like this. This was, after all, how Europe worked in the 18th century, as mercantilists pandered to nobles and royals who, in turn, granted mercantilists permission to do business, protected their businesses from competition, and collected handsome taxes from their profits. Adam Smith’s Wealth of Nations was, in part, a criticism of European mercantilism. So was theBoston Tea Party.

A libertarian solution to the mess politicians and corporations have made involves untangling the knots that bind government and business and banking together. It means that each Congress reduce the loopholes in law and taxes meant to coerce business behavior, eliminate regulations designed to change behavior toward some ideal, and reduce tax rates on businesses.

But that solution threatens a lot of people’s jobs.

Republican establishmentarians rose to power through this quasi mercantile system. They didn’t run on the idea of getting government out of people’s ways. They ran on getting government to favor their constituents, sometimes by holding back someone else’s constituents. Freeing business to thrive or die on a level playing would eliminate the skills that lifted McCain and Graham (not to mention Reid, Pelosi, Durbin, McCaskill, and Obama) to the top. And they’ll fight like hell to keep their power.

The Democrats practice crony capitalism more effectively than Republicans. While their constituencies might be different, the process is the same. Taxes and borrowing raise money that government distributes to favored groups and companies. Taxes and regulations coerce people to trade with those favored companies and organizations.Public education and green energy are two prime examples of Democrats driving economic behavior to benefit friends.

Still, McCain and Graham know that libertarians pose a bigger threat to their power than Democrats. The two big parties play the same game. Libertarians don’t.

The Public-Private Partnership Generations Are Dying

Just before the 2012 election, a poll showed that younger Millennials describe themselves as economic conservatives and social liberals. Their older Millennial siblings describe themselves as economic and social liberals. But both groups show a distrust of both government and big business.

If the GOP had convinced these younger voters that the party believed in limited government and economic liberty, in 2012 it might have eaten into Obama’s youth vote of 2008. Instead, the gap between the parties widened. We have to ask why.

The reason, as I’ve pointed out repeatedly, is authenticity. Establishment Republicans don’t really believe in limited government and economic liberty. They say they do, but they act differently. And younger people see the hypocrisy. Given a choice between Democrats who honestly profess their love of unlimited government power and Republicans who talk about limited government and free markets but don’t really live it, kids go with the party that at least says what it believes.

(Yes, I know Democrats lie all the time, and I’ve blogged about that ad nauseam. But on their fundamental belief in the near-miraculous power of government, Democrats speak the truth. You have to give them that.)

At the other end of the age spectrum, older voters vote Republican—not conservative or libertarian. They want government to increase entitlements, for instance.

These older generations include the last of the WWII generation who grew up during the New Deal and raised families during the massive government programs of the Cold War. Behind them is the Silent Generation which revered (and envied) their WWII elders, becoming the bureaucrats and regulators doing the grunt of government’s growth. The Silents implemented the Great Society programs, the War on Poverty, the Korean and Vietnam Wars. They were young teachers who conducted air raid drills, and they were the first to grasp the power of television. They believe in group work.

Then come the Baby Boomers—those too young to remember FDR’s death. They didn’t trust government to tell the truth, but they never complained when government did their bidding. Boomers were less statist than WWII or Silent generations – after all, Bill Clinton signed off on welfare reform – but they believe government can be molded into a force for good.

Generation X—those too young to remember Kennedy’s assassination—rallied to Reagan’s most famous maxim: “In this present crisis, government is not the solution to our problem;government is the problem.” Gen X is the tip of the libertarian spear, and it’s the generation that’s just reaching the pinnacle of power in business, government, education, information, and entertainment.

As I’ve said, the next generation, Millennials – those too young to remember the Challenger Disaster—are split. As generational historians Strauss and Howe point out, Millennials are much like their WWII great-grandparents. They believe in the power of groups and teamwork. They believe in working together to overcome obstacles. But they may not believe government should force people to do things. We see this in their attitudes toward the war on terror and their increasing drift toward libertarianism. Most compelling, Millennials support federalism when it comes to marijuana laws.

With their patriotic embrace of business and careful defense of entitlements, establishment Republicans are the natural allies of WWII and Silent voters. But those generations are dying fast. Nearly 10 million of them died between 2008 and 2012. The 2012 presidential election was the last for 11 million more.

There will be no more Gen Xers or Boomers to swell the ranks of older Republican voters. The last Xer was born during Regan’s first term. The only way the Republican party can grow, then, is by attracting Millennials.

There it is. Those libertarian kids and their vision of open, honest, limited government that does what it’s supposed to do—what we’ve authorized it to do—and nothing more.

Those damn libertarian kids in their dorm rooms who want to own their own lives instead of borrowing one from the government of Barack H. Obama.

Those libertarian kids with wacko-bird ideas like leaving businesses to compete in a fair and open marketplace where everyone plays by the same rules, faces the same risks, and benefits from the same economy.

Those libertarian kids who want America to go to war only when our liberty is at stake and only when we’re willing to fight for the unconditional surrender of the enemy. (And that’s not very often.)

McCain and Graham and the establishment—Republican and Democrat—fear libertarian kids more than al-Qaeda or Iran.

For a century, but especially beginning with the New Deal in the 1930s, the government has imposed restraints on everyone—some more so than others. Managing those restraints is what the establishment does best. It makes them rich and powerful and supports their fabulous lifestyles.

Those libertarian kids who terrify McCain and Graham want to grant equal liberty to everyone. Libertarians would, over time, remove the government shackles from our ankles. McCain and Graham, Obama and Pelosi, and all the restraint-keepers will have to find something else to occupy their time.

Rand Paul’s filibuster sparked the imagination in those libertarian kids. Imagination leads to stories, and stories, sometimes, become reality.

If the GOP survives, it must become more libertarian, younger, and authentic. It must look more like Rand Paul and less like John McCain.